Tuesday, 18 January 2011

what is money?

Some groups talk about fundamental monetary reform as a necessary element of addressing the 'recession'(more aptly Depression) triggered by the financial crisis in 2008. On the theme of monetary reform, I get the impression not all monetary reformed money is made equal. I started researching this issue online at the American Monetary Institute, through Steven Zarlenga's writings. I particularly like his historical narrative crediting Aristotle with recognising that “Money exists not by nature but by law.” He reports the success of government issued fiat currencies in the past and argues persuasively that advanced money systems are an abstract social power based in law and, counter to the claims of Ron Paul, Max Keiser et al in the goldbug element, money need NOT be gold based.

Positive Money does a good job of presenting the case in the UK. They have made a submission, in partnership with the new economics foundation & Southampton Uni, a proposal to the Independent Comission on Banking.

How the above organisations' proposals play out in a larger international monetary scene and whether it somehow consolidates a status quo of inequitable distribution of wealth I am still unclear. And as a reader of David Malone’s blog(Golem) I immediately wonder exactly how the proposals prevent the bankers from continuing to leverage and creating their own currency a la securitisation.

In trying to better understand money I have found Richard Douthwaite's, The Ecology of Money to be an invaluable and readable primer. Explains commercially produced money, privately & government created money and discusses the intriguing idea of multiple currencies within a country (e.g.: local; regional; national) and a separate international currency with drawing rights based on resources, emissions and population base.

Related to the monetary reform topic: In Germany and other countries, there is a growing movement for a universal unconditional basic citizen's income in the UK.

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